The Russian real estate market is facing challenges, with experts suggesting that a significant recovery is unlikely without substantial government intervention and lower interest rates. Valeria Malysheva, Director of JSC “Lenstroytrust,” believes a rate of 10-11% is necessary for a tangible market rebound, a level not anticipated until 2027 according to Bank of Russia forecasts.
Despite the current high rates, a shift from rate increases to decreases is influencing the deposit market. Approximately 33 trillion rubles are held in deposits for up to a year, indicating a considerable amount of available funds that could potentially be invested in real estate. Malysheva suggests that even a small fraction of this amount, around 5%, could significantly boost escrow account balances and revitalize sales in the primary residential real estate market.
However, a rapid shift of funds into real estate is not expected immediately. Deposits and OFZs currently offer more attractive options, and the Central Bank’s signals regarding interest rates remain cautious.
The market anticipates the introduction of a new government support program this summer, potentially comparable in scale to the IT mortgage program. This program, in addition to the existing military mortgage, could provide much-needed stimulus. However, the Central Bank has cautioned that expanding preferential programs excessively could strain the economy and necessitate further rate increases.
Expanded government support programs are expected to stimulate demand and, consequently, prices. However, price growth is projected to be moderate due to loan amount limits, particularly the 12 million ruble cap on family mortgages, which acts as a ceiling for housing costs.
Even with decreased demand compared to the previous year, prices continue to rise due to factors like project financing, construction material expenses, and labor costs. A slowdown in new project launches is also expected to contribute to higher costs per square meter, potentially leading to a supply shortage in the coming years.